Residential Real Property Construction
The purchase of new residential units for long term rentals as well as the construction of long term residential rental units has significant GST/HST and QST consequences.
To alleviate the current rental crisis the federal government reimburses the GST fully on the construction of residential rental units after September 13, 2024 for quadruplexes and multiplexes consisting of 4 or more rental units. As for the provincial portion of the HST, the rules differ amongst each of the 5 harmonized provinces.
Other constructions of residential rental units, such as triplexes may still be entitled to a GST refund, yet at a much lower rate of 36% of the GST. These refunds are also available to the purchaser of a new long term residential rental units and to the substantial renovation done on rental units.
There is also a similar program under the QST regime, yet the rebate is maxed out at 36% of the QST paid or deemed paid regardless if the residential unit is a quadruplex or a triplex.
Depending of the situation, a person may be obliged to proceed with the GST/HST/QST compliance in this sequence:
- Claim tax paid on purchases of goods and services for the construction
- Self-assess tax on the fair market value of the real property
- Claim tax rebate
Ad Valorem performs the tax compliance on the residential properties, do not hesitate to ask us for a quote.